Following two consecutive weeks of failed domestic borrowings, the national government made a partial award of the short-dated debt papers despite still elevated interest rates.
The Bureau of the Treasury raised P9.137 billion from auction of three-month, six-month and one-year IOUs, with total tenders reaching P23.35 billion, more than the P15 volume of debt papers placed on the auction book on Monday, March 14.
The yield on the bellwether 91-day Treasury bill, which banks use to price their loans, increased to 1.305 percent from 0.899 percent at the previous successful sale on Feb. 21.
The bureau sold P3.037 billion worth of three-month debt papers, lower than the P5 billion on offer. Investors however were asking for P8.959 billion of the government security or IOU.
The 182-day T-bill rate likewise went up to 1.458 percent from 1.157 percent previously.
The treasury accepted P3 billion worth of bids for six-month notes, lower than the P5 billion it had planned to sell. Investors however were willing to buy more, as tenders reached P7.22 billion.
The yield on the one-year IOU also jumped to P1.734 percent from 1.568 percent three weeks ago. The government was supposed to sell P5 billion of the 364-day T-bills, but it only awarded P3.1 billion.
“Interest rates continue to move up in tandem with the surge in oil and commodity prices and as markets priced in liftoff in US rates,” National Treasurer Rosalia de Leon told reporters after the auction.
Monday’s partial borrowing followed the Treasury’s four failed auctions of short- and long-dated IOUs after investors sought higher returns due to shocks caused by Russia-Ukraine conflict.
Last March 8, Finance Secretary Carlos G. Dominguez III said cash flow was not yet a problem for the government owing to P457.8 billion proceeds from the sale of five-year retail treasury bonds (RTBs).
“The government is well positioned to meet disbursements despite BTr's rejections during auctions,” Dominguez said.
On March 1, the Treasury bureau completed its new RTB sale that fetched a coupon rate of 4.875 percent. The government raised P457.4 billion in new money from the sale.